U.S. Markets closed

Edited Transcript of C38U.SI earnings conference call or presentation 23-Jul-19 2:00am GMT

Half Year 2019 Capitaland Mall Trust Earnings Presentation

Singapore Jul 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Capitaland Mall Trust earnings conference call or presentation Tuesday, July 23, 2019 at 2:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Cindy Chew Sze Yung

CapitaLand Mall Trust - Head of Finance

* Jacqueline Lee

CapitaLand Mall Trust - Head of Investment & Asset Management - Capitaland Mall Trust Management Limited

* Mun Wah Lo

CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited

* Tee Hieong Tan

CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited

================================================================================

Conference Call Participants

================================================================================

* Brandon I. Lee

Citigroup Inc, Research Division - Analyst

* Carmen Tay

DBS Bank Ltd., Research Division - Analyst

* David Lum

Daiwa Securities Co. Ltd., Research Division - Regional Head of Banking and Finance

* Derrick Heng

Macquarie Research - Analyst

* Donald Chua

BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director

* Jason Yeo

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Kheng Wee Chua

Crédit Suisse AG, Research Division - Research Analyst

* Vijay Natarajan

RHB Research Institute Sdn Bhd - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Mun Wah Lo, CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited [1]

--------------------------------------------------------------------------------

Good morning, ladies and gentlemen. I'm Mun Wah, VP of Investor Relations of the Manager of CapitaLand Mall Trust, or CMT, in short. Thank you for joining us this morning for CapitaLand Mall Trust First Half 2019 Financial Results Briefing. The results were released this morning before market opened. We will commence the briefing with a presentation by the CEO of the manager of CMT, Mr. Tony Tan, followed by a question-and-answer session. (Operator Instructions)

Without further ado, let's welcome Tony to share the results.

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [2]

--------------------------------------------------------------------------------

Thank you. Good morning, friends, colleagues. So we announced our result this morning. I hope no surprise for many. I would try as usual -- no, I wouldn't delve into detail, I'll get -- I'll leave more time for Q&A plus the numbers are, I think, quite easy to understand. You can -- most of you are analyst, you have done your number crunching. So I thought I will leave a little bit more time for the Q&A.

But I'll just point out some of the key highlights. So as usual, the usual disclaimer, just take note. So this is an overview of the first half result. If you look at the few matrices that we tracked from an operational performance point of view, rental reversion, I think pretty healthy. For this first quarter, we did 1.2% rental reversion positive. For first half, its 1.8%, slightly better. Again, please do not read too much into it. I think I've mentioned many times, rental reversion is very tactical in nature. Second quarter we may see very solid number, but second quarter we may like to make some adjustment.

Shopper traffic remained healthy, a bit slightly lower than the -- for the first half 1.9%, slightly lower than the first quarter of 2% on a year-on-year. Occupancy remained healthy, 98.3%, slightly lower than 98.8% in the first quarter. Tenant sales slight dip from first Q. First Q registered a decline of 0.5%, now we're looking at 0.9% decline, which more or less quite in general is what you see from the published sales data from the Singapore statistics.

So second quarter, we -- the main highlight as most of you know is just really the reopening of Funan on the 28th June. So we see 28th June as the beginning of a new, I can say a new -- hopefully, a new horizon for Funan. We achieved a fairly healthy occupancy. Retail at 95% and office at 98%. These are committed occupancy, not all of them are moved in yet, right?

Okay. Some financial highlights, which I mentioned earlier. I won't run into too detail. Just a few key things. This second quarter we have slight contribution from Funan. 28th June, that's the day they commence operation, so therefore, essentially 3 days of trading (inaudible). So a slight contribution from Funan. Overall, distributable income increased by 7.7% compared to the first quarter, which is about an increase of 7.4%, so slight improvement. The DPU, we have clocked in a -- for the second quarter year-on-year, a 3.9% increase, slightly -- again, slightly improvement from the first Q of 3.6%. For the first half, the DI, distributable income increased by 7.5% and the DPU basically increased by 3.8% on a year-on-year, so quite self-explanatory. This -- I don't think I'm going to talk much, no? Let me just run through some other numbers. On a gross revenue front, just like what I mentioned, the main contribution really coming from Westgate, of course, year-on-year. And similarly, from first Q, Westgate contributed main part of it with Funan coming in as well. So all in, we are clocking at 10.6% improvement in the gross revenue, which is slightly improvement from the first Q of 10% and NPI improved by 10.2% on a year-on-year, again, slightly -- in fact, slightly worse off than the first quarter, which we clocked at 11.5%. So usually, there's a little seasonal factor on a quarter-to-quarter to be expected. First quarter, normally on the peak side of the financial performance because we get the turnover rent flowing through over from the fourth quarter, so they'll be billed in the first quarter. So first quarter tend to see a little bit higher. Second quarter is sort of moderate down.

So do not be surprised, obviously, with all this fluctuation. On the first half -- for the full first half, revenue increased by 10.3% and the NPI increased by 10.9%, okay?

So this is a slice of -- on a mall by mall basis. Across the board, I think we generally see a improvement in performance ranging from a low of 0.2% slightly flattish to as high as 3.6% in Bedok Mall. Slight negative in the other assets. I think the substantial part -- if you strip out the last -- as I said -- I said we had included Sembawang last year on a year-on-year. So if you take the Sembawang out, I think, overall -- I think the main down will be coming from JCube. JCube slightly lower than last year about $0.4 million, okay?

If we were to compare on a same-mall basis, revenue have gone up by 1.2%. OpEx for this first half increased by 8.9%. Again, if you strip out the noncomparable on a same-mall basis, we're looking at a decline of basically 1%, okay? For the NPI, which is a flow down number, increased by essentially 2.1% on the same-mall basis. For the joint venture, essentially just Westgate. Last year -- sorry, Raffles City. Last year, where Westgate, which was a joint venture and we -- as you know, we bought over the remaining stake in November last year, so not very comparable. What's more comparable really on a same-mall basis is essentially Raffles City. If we take that in, I think, Raffles City has improved by 3.7% on NPI side.

Debt maturity, I think more or less we are done for this year, although there are some maturity coming due in essentially in the fourth quarter October this year, but we have more than sufficient bank loan to take that out. So the $360 million, which includes the bank loan at the property WALE in Westgate, which we assume when we took over as well as the CMT level. So when we combine $360 million, I think we have more than sufficient competent line to take that out, including next year 2020. So I think from a refinancing point of view, this 2 years is all sorted out.

So we will look at opportunity to see whether we could look at a better access to the capital market to get a more preferential rate.

Some of the financial matrices I think remained very healthy. From an asset encumbrance point of view, we have improved. Now 90% of our assets are unencumbered, remaining are the Westgate portion. Aggregate leverage, 34.2%, not much movement. Net debt/EBITDA, slightly higher because the second quarter has got lower EBITDA than compared to first quarter. Overall, it's slightly higher. Interest cover, I think is still very healthy 4.7x and average term to maturity has strengthened to 4.9 years as we did a 10-year deal. I think if you note that we did a 10-year deal in dollar, in first -- in fact, in the beginning of second quarter. Average debt -- cost of debt remained flat at 3.2%.

This first half we clocked in a valuation -- slight valuation gain. Overall, the cap rate remained fairly flat. I think based on the assumption in -- the value has taken on, not much changes from last valuation. So some numbers has gone up essentially as a reflection of better operating performances. And this quarter, you'll see the Funan for the first time, we evaluate on a completed basis. So it came in at about $751 million, which is a -- the portion that's been TOP. So the TOP portion is the 2 office tower in retail component. We still have remaining some part of it yet to be TOP, basically done in the past, the under passageway linking from the Raffles City MRT -- sorry, the city hall MRT Station to Funan. I think that will be completed only in 2021, as well as the under passageway linking Delphi to Funan, so that will also be completed only in 2021. So we still have a remaining portion of TOP. So there's a bit of a cost to be incurred later on.

But otherwise, I think from a number point of view, I will say fairly conservative. Cap rate from a retail -- from a valuation perspective, the cap rate flat at 4.5% and office cap rate at 4%.

Balance sheet, very healthy. We -- essentially, it has a net improvement in the NAV, rising substantially from the net -- the increasing valuation of the property. So on adjusted basis, NAV now stands at $2.04 -- $2.04. So these are just some -- this to remember. I know you all are unitholder, just pay attention to the statement.

Some numbers, which I've earlier given up, I think, shopper traffic remained very healthy, somewhat affected by the opening of Jewel. I think some of the malls have seen a bit of impact, particularly the eastern part of the mall, Tampines Mall and Bedok Mall. We do see some decline in traffic with the opening of Jewel at the beginning. Now they're a little bit off ground. We'll see whether the -- going forward that it could normalize further.

Tenant sales, a bit soft, 0.9%. January saw a reflection of the current state in Singapore. I think -- I would think that the consumer would be a little bit more conscious now in term of spending. This is a breakdown of some of the category. I think, compared to the last report, we took out some of the very extreme 1. So these are the area I think we thought would be good to highlight. Overall, very mixed picture. We see some impact on spending -- discretionary spending like the home furnishing this year quite a big decline. But last year home furnishing was the star. Home furnishing, in fact, home furnishing and consumer electronic -- electrical and electronic were quite star performer. Last year, we had healthier property market. This year, I think, a little bit more cloudy. With lower handover, I think the -- it's also a reflection of the sentiment on the ground. A bit more challenged would be the IT and telecom, specifically the telecom side. I think the trend seems to be a more prolonged upgrade of telecom, your mobile phone. I'm not sure whether it's true for you, it's certainly true for me. I don't upgrade so frequently. So it does reflect in the number. So we see a little bit of a decline over there.

On the other hand, saw the things that have been pretty healthy. We took courage on what's for instance, F&B. F&B has been growing quite nicely, 3.5%. This is the largest component from vendor contribution point of view in our portfolio. It's doing well.

Sporting goods, although has gone up very high, 8.5%, what really standout was really the outlet business where we have quite a fair bit of outlet shops catering to the sports and sports apparel. I think those are doing very, very well.

Yes. Jewel and watches are a little bit up. So it's kind of a mixed picture I would say, but overall I think is cautious. Some of them, you look at, is really about discretionary. You know people are still spending on a selective basis, but then some are a little bit affected by the -- perhaps the realty cycle, a little bit down. And overall, I think we see a very mixed picture.

We also took comfort that the top 5 category in our group in term of rental contribution assuming that more than 70% of our rental contribution I think we grew at 1.2%. So these are the key more important 1 that we pay close attention to.

Rental Reversion been healthy. I just mentioned at the beginning. Do note that it can be very technical in nature. But overall, I would say it does reflect the fact that the supply has tapered down. I know we do still face competition. Don't go away thinking that it's going to be a landlord deal. I think it's still highly competitive in the market. But the fact that I think the huge over -- so the huge supply overhang in 2019 -- 2018 to 2019, in fact, from 2017 onward, more or less has taken a loss, so 2020 and beyond, I think a little bit more healthy.

Portfolio expiry leases to go nothing much to show, some of this is representing about 7% of our rental income. So that's something we'll work on. This is just a breakdown. You can -- you will notice that 85 -- I'm actually at the last part more than -- almost 60 units of it actually belongs to the warehouse component. So the retail is about 20-plus only.

Occupancy remained pretty healthy overall, at 98.3%. Sometimes a little bit timing difference, but I think we are not concerned. Funan, I mentioned, on a blended basis -- blended office and retail, we are at about 96.1%. And as we speak, we are also engaging new tenants coming in, so we expect the number to go up as well.

So the main highlight, second quarter has been about the opening of Funan. I think most of you would have already visited or have some briefing through our colleagues in Funan as well as our colleagues, Mun Wah, I think has been also addressing some questions. So some other data, the facts is laid out here. NLA is about 319,000 approximately around there for the retail component and office is about 214,000. 400 car parks and bicycle bays are 174. Although visibly you don't see it, actually in the basement there are quite a -- a fair bit bicycle bays.

Architecture-wise, I think it has been a key shout for Funan. We have received very, very positive review, in fact, even around the world. People take notice on Funan, and I think we can take pride that the team on the ground has executed the project very, very well. Quite a few interesting concept introduce, very new, Tree of Life. We talk about Kinetic Wall, Urban Farm, Indoor Cycling, I mean, these are additional features that sort of reflect the way we think, especially the new wave of consumer. Think about the space that they work -- live in, now it would be slightly different. And it doesn't mean that all property will transform in that manner. No, it has to be very well thought through and calibrated. It's not easy to execute. You can't do it because -- unless you -- you can't do it unless [you had the entire unit] and design from a clean sheet. So not all property can turn out to be that kind of an outcome.

And retail is always very -- a micro market. If you look at micro market, it really drives the needs or the combination needs in micro market. But Funan I think is a good showcase, something that we thought would be important, downtown-centric, not exactly the best site location, although it's in downtown, but it's about 200 meter away from the MRT station. We have a couple of offering along the way. So Funan has to be a destination. So with that, we hope that we have created a little bit of impression on the consumer.

Offerings quite diverse. I think, we mentioned earlier that about 30% really new to market and about 60% are local content, which is important. You want to create a little bit -- something different, so 60% are local content.

So I don't think I want to talk too much. I think our comp people and our IR side has been -- briefing a lot of you guys. In fact, you have also gone to the -- on-site to see the mall. So I wouldn't dwell too much on this. Essentially, the takeaway is that Funan now has gone -- has come onboard. It's been introduced to the market. In the early days, of course, very high excitement. Now we need to see the performance. Certainly, the first 3 days have been very encouraging. We get very good reception. Tenants we are treating well, so we need to keep that momentum. So going forward, we will see areas where we need to recalibrate the offerings. The current site is not ideal yet in my mind. I think we do have some ways to make some adjustment in the next 2 to 3 years, yes. So I think from CMT overall perspective, with the completion of Funan 2019, 2020, in fact, it stretch all way to 2021, the financial numbers have stacked up quite nicely. I think we -- okay, all right. We started to embark on another rejuvenation of our older assets, Lot One in Choa Chu Kang starting with the 2 key anchor, the library and the cinema. Library wanted to expand the space and we are very happy to give them additional space, allow us to redesign the entire library space. It will be quite nice when it's completed. So we added additional, about 600 meter of space to the library, which we can cover elsewhere.

Cinema, we thought it is important to reconfigure the format. The old format seems no longer relevant. Big screen, one big screen with 3 other small screen. I think these days consumer want variety. So we took the decision to reformat it into 8 smaller, essentially hall, to cater to a wider audience. So this is in the works starting from, in fact, from second half. It will stretch all the way to -- expect it around third quarter next year.

Ballpark CapEx, we're looking at between 18 to -- SGD 15 million to SGD 20 million, not a hefty sum. But this -- to me, this is a key ingredient to anchor Lot One, being the 2 important anchor to perhaps start refreshing the mall along the way, right?

Other growth area that we're looking at, I think in the last result announcement, I did mention a little bit, we're obviously looking out. I think we have the capacity to take on transactions, given our very healthy balance sheet. We are also studying the draft plan, the master plan, from URA closely. I think there are some opportunities for us to look at how we can rethink about the space. Some of the property that we -- we're operating in, but it'll take some time. But I think the fact that the draft plan that was announced give ourselves new anchors to look at, so I think we are studying that more intently in the next 1 or 2 years. Immediately, I think, we definitely -- we came to look at acquisition. If there are acquisition prospect out there, I think we are keen. Whether it's Singapore or overseas, I've said many times, we keep an open mind. While we're also driving the growth in Singapore, which is important because Singapore -- eventually in the long run in the foreseeable future, I think Singapore will still be the main, I can say, the base for CMT. But at the same time, we know there will be a limitation in Singapore. At some point, we really need to consider whether we should look at -- beyond the shore.

So we are looking. I think we are keeping an open mind. We get deals flow. We are assessing carefully and we are thinking through how best we could tap potential opportunity out there, both in Singapore and overseas as well.

I think with that, I'll end here.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Mun Wah Lo, CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited [1]

--------------------------------------------------------------------------------

Thank you, Tony. Why don't we just -- the rest of the members of the panel can also join you now. Right, just to introduce to you the members on the panel. On Tony's right is Ms. Cindy Sze Yung, CFO of the manager of CMT and on his left is Mr. [Richard Ng], Head of Investment and Asset Management. If you have a question, please raise your hand so that my colleague can hand you a microphone. Can you introduce yourself and the organization you represent? Right. Do we have a first question?

--------------------------------------------------------------------------------

Brandon I. Lee, Citigroup Inc, Research Division - Analyst [2]

--------------------------------------------------------------------------------

Brandon from Citi. Just a couple of questions. Could you give us the tenant sales growth and the traffic growth for second quarter '19 itself, and particularly on the performance of companies more and a bit of mall as I think they were -- as you mentioned, they are more affected by Jewel?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [3]

--------------------------------------------------------------------------------

So second quarter quite in line with RSI. If you look at the RSI, the impacts have been down 1% -- 1-ish percent. Second quarter, we called in about 1.0% decline on a year-on-year. Tampines, Bedok -- Tampines is a little bit more, particularly the F&B because I think Jewel has got -- I must admit Jewel has got quite interesting F&B offerings. It does create quite a strong pull. So F&B has been a little bit affected. At the earlier period, we saw a bit more impact, more decline. Overall, we're looking at a -- I would say high single-digit decline. Bedok Mall slightly less, low single-digit. Bedok Mall is set around low-single-digit. And I think Tampines has settled down somewhere in the mid-single-digit, yes. But we are also watching some particular trade, which we felt may be a need to recalibrate Tampines more in view of the very strong offering in Jewel.

Overall, we still in the long run feel the Tampines cluster has got its own legs. I think it is a strong cluster with complete offering from the Tree shopping center. It will have its own pull. Organically, Tampines is growing as -- from a demographic point of view and we think will be all right now. It's just that whether the novelty effect would take 3, 6 months or 1-year to wear off, hard to say. Earlier, I would imagine a lot of interest both for local and overseas visitors, how they spent, whether they spent in Jewel or spent downtown outside of Jewel, local as well. Not easy to predict. One thing -- I'm sure, most of you have gone to Jewell multiple times, F&Bs looks -- doing pretty well. Also F&B, hard to say, but whether that's a settled trend, also hard to say. Because some people prefer to go during a period where the novelty effect wears off, some people just like the crowd. So overall, how they will end up I think is hard to say. But I will give it a little bit more time, maybe until the end of the year to really make an adjustment. Yes.

--------------------------------------------------------------------------------

Brandon I. Lee, Citigroup Inc, Research Division - Analyst [4]

--------------------------------------------------------------------------------

Just one more question on Funan. For the $3.3 million of OpEx for first half of this year right, how much of that is preopening costs? And could we see more of these come second half of the year?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [5]

--------------------------------------------------------------------------------

So a large part is the preopening manpower, marketing expenses so a large part is really the preopening expense. So it will normalize from -- so first -- in fact, first quarter after TOP and second quarter after TOP, we get the expenses of functionality, right? No revenue. Second quarter only the 3 days' revenue, which you saw about -- less than $1 million. But the revenue start kicking in from July. So that will even out. The expenses, I think we may ramp up a little bit more because of the additional manpower that we need when it's fully opened. Otherwise, I think we are on the right trajectory yes. Yes.

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [6]

--------------------------------------------------------------------------------

Vijay from RHB. I have a couple of questions. Maybe I'll start one-by-one. On Funan valuations, what are the assumptions behind this valuations? The valuation at below 1,500 square feet seems a bit low. Do you see more upside on this?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [7]

--------------------------------------------------------------------------------

Okay. I'll give some color. I think maybe Jack you can help chip in. Generally, the value we look at it before IPO -- before TOP, we have been valuing it at essentially the land value, the residual land value. But the value I do have in the number if you look at the development value -- for development value minus of whatever expected CapEx there will be so-called residual end value. Because there were no land transaction so you can't -- comparable land transaction to make a comparable. So the most practical way to do it before the TOP is look at residual basis. So once this -- but in the meantime, we are incurring CapEx. So we are pumping CapEx. All these are capitalized on a book, so it's captured in a book. It just valuation why -- so we just take the land value.

Post TOP, you value it based on the investment property so that your usual kicker comes in. So the value, in fact, in the minor value, they have a full development value even before the TOP just that from the way I will put it is not TOP, we do not publish the full value until it's post-TOP. So the assumption before and after has not changed.

So they look at a few matrices for the value. Obviously, they also look at market capitalization. This is the norm. They look at the cash flow basically, the strong cash flow, look at your projection on a revenue. They have assumption or terminal value. They do that as well. And also comparable in the market obviously, there were no -- not a real comparable from a transaction that may I need to compare with. So this -- the (inaudible) around Tree is to fill and -- so there will be a number been down. So on the absolute value, it looks lower. It's about 1,004 on a per square feet. It looks pretty low. But do not forget also a risk property will have about 60 years. So generally there would be a little bit discount compared to a 99 or fresh-leased property, yes. But the full value (inaudible) in the market.

--------------------------------------------------------------------------------

Jacqueline Lee, CapitaLand Mall Trust - Head of Investment & Asset Management - Capitaland Mall Trust Management Limited [8]

--------------------------------------------------------------------------------

Just to add. The $751 million is property valuation, the $360 million was land. So the -- but the $751 million is not the full completed value, because there's still some costs to go, which has been deducted off the valuation. So there's still the underpass and a few other works that are outstanding. So $751 million is not the full valuation at this point in time.

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [9]

--------------------------------------------------------------------------------

Okay. On the acquisition front, with jewel stabilizing, do you see that as a potential acquisition asset in the near term?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [10]

--------------------------------------------------------------------------------

Sorry, acquisition side?

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [11]

--------------------------------------------------------------------------------

Yes, with Jewel stabilizing, do you think that is a potential target acquisition asset in the near-term?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [12]

--------------------------------------------------------------------------------

We are always looking out. I can't comment. Obviously, we'll be keen to do that and we have the capacity. We can do up to $1 billion, $1.2 billion easily. No issue. I only can say that we are keen.

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [13]

--------------------------------------------------------------------------------

Okay. Okay. And on Clarke Quay, there's a decline in occupancies of about 4 percentage point. Is that a transitional vacancy?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [14]

--------------------------------------------------------------------------------

You will expect Clarke Quay can be a bit volatile because of the nature of the trip. So recently we have done some changes, especially the club site. The club certainly need a bit of a refresher. So I think last year, we mentioned about Holey Moley, which is not exactly a club, more family kind of entertainment. But the clubs, we're definitely looking at some changes. In fact, we have introduced a new 1. It will be opening this Friday, in fact, it's a new concept brought in by the One Equity Group to Clarke Quay. So they will fill up the old space occupied by old Clarke. So Clarke Quay, I expect it to be a little bit more volatile because the club space can be chunky. Now they can take up 5,000, 6,000 square feet of space. So when they exit, the new -- you may not have a perfect timing, so there could be a little bit of volatility in numbers. Yes.

--------------------------------------------------------------------------------

Mun Wah Lo, CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited [15]

--------------------------------------------------------------------------------

Just a follow-up question on Clarke Quay. Do you mind sharing if there are potential upside through looking at Clarke Quay and (inaudible) together? This is from Derek Tan of DBS.

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [16]

--------------------------------------------------------------------------------

Early days, depending on how the (inaudible) pans out, I think the opportunity to look at some kind of synergy, yes, definitely. Yes.

--------------------------------------------------------------------------------

Carmen Tay, DBS Bank Ltd., Research Division - Analyst [17]

--------------------------------------------------------------------------------

Carmen from DBS. Can we just get a sense of the trading environment for Raffles City over the last 2 quarters? And also, if you could -- an update on the (inaudible) at Westgate?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [18]

--------------------------------------------------------------------------------

Okay. So Raffles City has improved over the second quarter overall. There -- some trades have done pretty okay. For instance, the luxury space seems to be doing well, the luxury space. But, of course, there are some challenges as well. So overall, I think it's a net improvement. In fact, Raffles City potentially can benefit with the opening of Funan. We do see a bit of spillover effect, especially over the weekends. The footfall has improved over the weekend compared to before the Funan. So I think, there are a bit of -- on a net basis perhaps more visitors to that location, yes. (inaudible) we are still talking to few parties and negotiating with a few parties. Today, I don't think we can disclose it yet. Yes. We are [splitting] the space up lightly.

--------------------------------------------------------------------------------

Kheng Wee Chua, Crédit Suisse AG, Research Division - Research Analyst [19]

--------------------------------------------------------------------------------

Louis from Crédit Suisse here. I've got 2 questions. I mean, the first one is on valuations. I think Junction 8 seems to stand out in terms of the reval gain whereas the NPI reversion seem pretty stable. So maybe what's driving the increase over there?

--------------------------------------------------------------------------------

Jacqueline Lee, CapitaLand Mall Trust - Head of Investment & Asset Management - Capitaland Mall Trust Management Limited [20]

--------------------------------------------------------------------------------

Okay. I think, for Junction 8, the value actually was more bullish on the market rentals. So that was -- that drove the increase. If you look at the other properties, you will see that maybe it's about 0% to 1% increase. So the bulk of the increase in valuation came from Funan and Junction 8.

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [21]

--------------------------------------------------------------------------------

In fact, Junction 8 has -- we've seen quite a -- in fact, very healthy uplift in the footfall, it's a very, very healthy uplift.

--------------------------------------------------------------------------------

Kheng Wee Chua, Crédit Suisse AG, Research Division - Research Analyst [22]

--------------------------------------------------------------------------------

And the second question I think Tony, just like you mentioned for Funan, for example, we were able to get a clean slate. So just to get a sense of your current portfolio now, when you think about which are the assets which has unutilized GFA or the ones which can potentially benefit from the draft master plan, maybe you can help us to identify some of these potential ones?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [23]

--------------------------------------------------------------------------------

I can't disclose, only there are few on hand is really 3 to 4 we're working on. The -- it depends on what could be accepted. At the end, it's about whether it could be accepted. And it varies -- the skill varies. So I can't comment at the moment. Yes.

--------------------------------------------------------------------------------

David Lum, Daiwa Securities Co. Ltd., Research Division - Regional Head of Banking and Finance [24]

--------------------------------------------------------------------------------

David Lum from Daiwa. Two questions. The first is, can you hazard a guess as to what would be the weighted average physical occupancy at Funan for the second half of the year?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [25]

--------------------------------------------------------------------------------

Weighted average, excluding the office?

--------------------------------------------------------------------------------

David Lum, Daiwa Securities Co. Ltd., Research Division - Regional Head of Banking and Finance [26]

--------------------------------------------------------------------------------

Everything. No, include everything.

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [27]

--------------------------------------------------------------------------------

Weighted -- office is low. Office, only we work -- as we speak today, we work -- at the end it's moving. A big bulk of it will come in, in around August/September. I think, perhaps you strip out the -- just a reference for 6 months may be about 70%, 80% retail, maybe 70%, 80% for office. Retail, we opened up quite high, 84%, almost 90%. Today, I think will be quite high, 94%. Yes.

--------------------------------------------------------------------------------

David Lum, Daiwa Securities Co. Ltd., Research Division - Regional Head of Banking and Finance [28]

--------------------------------------------------------------------------------

Okay. And the second question is it pertains to your retention of distributions. I noticed that you didn't retain anything for the second quarter, it's the first time in quite a few years. So going forward, what is your retention policy?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [29]

--------------------------------------------------------------------------------

We generally still prefer to retain the nontaxable component. So at CRCT, I think generally we won't unless on the need basis. The taxable 1, we will distribute it eventually, which we did for, I think, all these years, so I don't think that will change. Yes. It's just that sometimes we want to provide some provision more than so, so that there is a further -- some tension pressure on the future quarter, we have a little bit more than retention that we can release. It's more conservative. By the end of the year, we will issue everything, the taxable component.

--------------------------------------------------------------------------------

Derrick Heng, Macquarie Research - Analyst [30]

--------------------------------------------------------------------------------

This is Derrick from Macquarie. A couple of questions. First is on the -- Funan itself. May I know what's the outstanding CapEx left till 2021? And the other one is percentage of debt on fixed itself since SOR come down, are you seeing some benefits when you do refinancing?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [31]

--------------------------------------------------------------------------------

The remaining CapEx substantially, related to the underpass -- the under passageway. We have that number?

--------------------------------------------------------------------------------

Jacqueline Lee, CapitaLand Mall Trust - Head of Investment & Asset Management - Capitaland Mall Trust Management Limited [32]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [33]

--------------------------------------------------------------------------------

We do not have the full number yet. It can be between $50 million to $80 million, yes. That will be the borrow rate. What is your second question?

--------------------------------------------------------------------------------

Derrick Heng, Macquarie Research - Analyst [34]

--------------------------------------------------------------------------------

Debt on fixed?

--------------------------------------------------------------------------------

Cindy Chew Sze Yung, CapitaLand Mall Trust - Head of Finance [35]

--------------------------------------------------------------------------------

Sorry. Your question is if this all coming down, what are the benefits.

--------------------------------------------------------------------------------

Derrick Heng, Macquarie Research - Analyst [36]

--------------------------------------------------------------------------------

Have you seen benefit when it comes to refinancing? And also the percentage of debt on fixed costs?

--------------------------------------------------------------------------------

Cindy Chew Sze Yung, CapitaLand Mall Trust - Head of Finance [37]

--------------------------------------------------------------------------------

The current debt on fixed is 97.3%. So for that, I mean, we have shared that, we are prepared to increase the floating ratio we can go up to 80% fixed, go down to 80% fixed. So SOR is coming down. We realize that the investors spread is also coming down a little bit. So it should be good. But let's take a look at it again in October when the next refinancing is due. But for that, we have bank loans in place to at least refund at first.

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [38]

--------------------------------------------------------------------------------

Over time, of course, we hope we are able to manage down the average cost of debt. Compared to maybe 6 months ago, for the same channel, we'll have got some good savings for the same channel. Yes, easily about 20 bps.

--------------------------------------------------------------------------------

Mun Wah Lo, CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited [39]

--------------------------------------------------------------------------------

Some more questions from the webcast. I have 1 from Nicholas Teh from Crédit Suisse. Actual occupancy at Funan in second Q and currently, what proportion of tenants at Funan were contributing during those first 3 days in 2Q? And are there still any tenants in fit out period and haven't started contributing?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [40]

--------------------------------------------------------------------------------

I think, I earlier mentioned, opening was in the mid-80s. So those are the 1 contributing retail side. Office side, not really. I mean it's very negligible.

--------------------------------------------------------------------------------

Mun Wah Lo, CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited [41]

--------------------------------------------------------------------------------

Okay. Sorry. One more question here. This is from Xuan Tan of CLSA. Can you share some color on the decline in occupancy against positive reversion? Is this a deliberate leasing strategy or transitional in nature? One more question is that, also on the drop in tenant sales, despite growth in shopper traffic -- also on the drop in tenant sales despite growth in shopper traffic?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [42]

--------------------------------------------------------------------------------

So first question was more the reversion, yes?

--------------------------------------------------------------------------------

Mun Wah Lo, CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited [43]

--------------------------------------------------------------------------------

Decline occupancy against positive reversion, so is this deliberate leasing strategy? Or is it transitional in nature?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [44]

--------------------------------------------------------------------------------

Occupancy, I mentioned is transitional, right? It's timing difference. Reversion, very tactical. We have seen some improvement in some malls, some lower. Overall -- for example, Westgate is a little bit lower -- in fact, it's higher, much higher than first quarter. Westgate I think has got a bit of traction, we're quite pleased with it. The one that came down is Junction 8. Sometimes it's really because of the change of trade that we bring in, wanted to introduce. I wouldn't be able to name specific case. Clarke, yes, would be very healthy, for instance, Clarke Quay, let's bring the Clarke Quay, first quarter was I think 3%. Second -- for the first half is 0.7%, so it's actually a lower number, but we also brought in new concept. So it's about bringing new concept, taking up newer position. So I think that's normal. Nothing to be alarmed. Also improvement -- you can see improvement in Raffles City. It was minus 3.1% in the first quarter. So this quarter, I think it's improved to about minus -- in fact, this is first half, right, minus 0.3%. But there are some adjustments still in Raffles City. So again, I just want to caution, there will be some volatility in some numbers here.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [45]

--------------------------------------------------------------------------------

Donald from BML. A couple of questions. One on Raffles City since we're talking about that. So for the first half, your revenue is up slightly, but NPI is up disproportionally more, presuming the OpEx is lower. Is this a trend going forward that we're seeing? Or what's the -- can we reconcile these numbers for Raffles City?

--------------------------------------------------------------------------------

Cindy Chew Sze Yung, CapitaLand Mall Trust - Head of Finance [46]

--------------------------------------------------------------------------------

Raffles City's OpEx, there were some one-off adjustments.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [47]

--------------------------------------------------------------------------------

Okay. So if we strip out the one-off adjustments, you still see same-store NPI a little bit the same level as revenue or similar?

--------------------------------------------------------------------------------

Cindy Chew Sze Yung, CapitaLand Mall Trust - Head of Finance [48]

--------------------------------------------------------------------------------

Similar.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [49]

--------------------------------------------------------------------------------

Okay. The second question is why is there an ROI for your debt CapEx of $15 million, $20 million?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [50]

--------------------------------------------------------------------------------

Very low.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [51]

--------------------------------------------------------------------------------

Very low? Okay.

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [52]

--------------------------------------------------------------------------------

A small infrastructure. We are looking at more as a foundation, right, low single-digit.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [53]

--------------------------------------------------------------------------------

Got it. Lastly, is more strategic. You're talking about acquisitions in Singapore and keeping an open mind overseas. Has your assessment of what overseas markets that you're evaluating changed over the last 12 months? What regions that may be suitable for you at this point that you're looking at?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [54]

--------------------------------------------------------------------------------

We -- there also is a small factor of what kind of deals we're servicing, which are essentially opportunities, right? We have not really pinned down a specific geography, so I say, we keep our mind very open. Every country, I think has their own issues, whether you're looking at emerging or developed market, different kinds of sets of problem. So we look at opportunity, what is available out there. Of course, we also need to decide eventually how you want to play the game overseas. At the end, whether the sponsor is present, no sponsor is present, who will likely be your counterparts if there's no sponsor present. So we have a lot of factors to consider. Look at the spread, after-tax spread. What kind of spread versus what opportunity in Singapore. So we have to calibrate many, many matrices and essentially form an opinion. Still early days. There are -- certainly seems to have more asset available out in the market in some geography now than before, which may be interesting. Yes.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [55]

--------------------------------------------------------------------------------

Where?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [56]

--------------------------------------------------------------------------------

I won't say where.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [57]

--------------------------------------------------------------------------------

Okay. But the sponsor presence, CRCT sponsor presence is a key ingredient for you to decide where to go?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [58]

--------------------------------------------------------------------------------

I do. Yes. I do.

--------------------------------------------------------------------------------

Jason Yeo, Goldman Sachs Group Inc., Research Division - Equity Analyst [59]

--------------------------------------------------------------------------------

It's Jason from Goldman. Can I follow-up on an earlier question because shopper traffic and reversions were up despite sales being down. How do you think about, I guess, the dynamics and the disconnect between the 3?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [60]

--------------------------------------------------------------------------------

So I don't want people to overreact the number. Sales down doesn't mean it's unhealthy. It's not the tenant actually may have seen the decline in sales, but how -- trading a healthy level. So it's not an issue. We also have been proactive. We look at the threshold of all the tenant. When it's not sustainable, we will take corrective action. So I think the -- this holding about the business, now you need to be proactively managing for the TAO Tree offering and then also the kind of brand offering, and of course the tenant that operates it to ensure that overall they must be trading at a healthy level. Yes. So having said that, there are also a lot market -- new market entrants that are very keen. As you can see in Jewel and also in Funan, many new players actually very keen to come to the market here in Singapore still. So I think we have that capacity across the portfolio to look at them and then we have a little bit of edge in a sense because I think when we look at the potential footprint in Singapore, we are one of the more natural ports of call.

--------------------------------------------------------------------------------

Jason Yeo, Goldman Sachs Group Inc., Research Division - Equity Analyst [61]

--------------------------------------------------------------------------------

Okay. And just the last question to Fairmont acquisitions. In terms of the environment in Singapore, how do you look at it? Because I think it's quite competitive, right?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [62]

--------------------------------------------------------------------------------

It will be very competitive. I think we've ordered all the gloom and doom in a way -- in fact, Singapore stands out very nicely, despite potential slowdown being -- affecting the common side. But I think, it pains Singapore in a way. That's my own view. I think Singapore became even more attractive now. So there will be strong competition for us in my view. Yes.

--------------------------------------------------------------------------------

David Lum, Daiwa Securities Co. Ltd., Research Division - Regional Head of Banking and Finance [63]

--------------------------------------------------------------------------------

In terms of forecasting rental reversions in the future, should I assume that 1.8% to 2% is something that I should expect? And that like 5% or 6% might be too optimistic, given what you just said about being tactical and all that?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [64]

--------------------------------------------------------------------------------

Yes, probably. Probably so, yes. 0% to 2%, I'll give myself a bigger range. Donald?

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [65]

--------------------------------------------------------------------------------

Sorry. Just 1 quick question. The -- we were talking about URA master plan, potential redevelopment and all those things. I know you can't disclose, but should we be expecting something of a larger scale kind of thing, like a Funan-type of potential for going in the next few years? Or is it small-scale...

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [66]

--------------------------------------------------------------------------------

I think I did mention the range can be small. It can be all the way.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [67]

--------------------------------------------------------------------------------

So is a full...

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [68]

--------------------------------------------------------------------------------

It can be only the, yes, yes.

--------------------------------------------------------------------------------

Donald Chua, BofA Merrill Lynch, Research Division - Head of ASEAN Real Estate Research and Director [69]

--------------------------------------------------------------------------------

And lastly, the JCube, what's happening there when it comes to -- are we operating -- performance had been weak. Is this something that will -- you're looking to go through tenant rejuvenation? Or is this -- is it more of a bigger redevelopment or hardware that you're looking at? Or what's the plan there?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [70]

--------------------------------------------------------------------------------

So in the medium -- short-to-medium term, we're trying to ramp up the operation. So I think if you go and visit JCube today, we are very -- hardly have a few places left, so wait for news. I think they're interesting. May not be new to market, but interesting operator coming in. Hopefully, that will catalyze a little bit. In fact, over the years we have done some changes at level 3, level 4, that's slowly shaping up. Level 2 is a challenging one, but it doesn't mean that Level 2 all are operating weak. No, there are weak spots, but there are also healthy tenants trading there. So we are making some adjustments. 3 and 4, has a lot of work been done really, so Level 2 not yet done. Basement 1, now you take a look -- we are harder already, yes. We're assuming being one -- want to be prepared -- now the new temporary bus terminal is expected to be, it is nothing next to JCube. We expect it to be operational, I think, by the end of the year. This is what is understood now, end of the year. That would be a little bit -- a different dynamic. Yes.

--------------------------------------------------------------------------------

Carmen Tay, DBS Bank Ltd., Research Division - Analyst [71]

--------------------------------------------------------------------------------

Sorry, Tony, why did -- Bukit Panjang Plaza used to be on its own, but now you've lumped it under JCube -- with JCube into others. Is there a reason for that or?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [72]

--------------------------------------------------------------------------------

Because these all combined contribute less than 3% each. But BPP has recovered from the impact. It's trading okay. Yes. So remember, the early days when Hillion opened, we saw a bit of, in fact, very immediate cannibalization. In fact, the impact was even worse than Tampines Mall from Jewel, a bit more. We have recovered ground. So I think they are trading at a reasonably healthy level.

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [73]

--------------------------------------------------------------------------------

Tony, just a follow-up. In recent days, there has been some talks about fair tenancy and fair rent framework by business federations. What's your thoughts on that?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [74]

--------------------------------------------------------------------------------

Sorry, again?

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [75]

--------------------------------------------------------------------------------

Fair rent framework or fair tenancy legislation in terms by which...

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [76]

--------------------------------------------------------------------------------

Fair trading?

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [77]

--------------------------------------------------------------------------------

Yes, no. Fair rent framework structure and fair tenancy legislation where they are looking at...

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [78]

--------------------------------------------------------------------------------

That's very new to me. What's that again?

--------------------------------------------------------------------------------

Vijay Natarajan, RHB Research Institute Sdn Bhd - Analyst [79]

--------------------------------------------------------------------------------

It's okay. I think there's has been discussions in terms of capping the rent increases and...

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [80]

--------------------------------------------------------------------------------

So this is the fact -- so I think those -- it's not new. In fact, we have been engaging the retailer quite proactively. So this discussion point is not new. The Retailer Association and the landlord actually does work together to look at a mutually beneficial kind of, in fact, fair contractual arrangement. So it's not new.

--------------------------------------------------------------------------------

Mun Wah Lo, CapitaLand Mall Trust - VP of IR - CapitaLand Mall Trust Management Limited [81]

--------------------------------------------------------------------------------

Just 1 question on the webcast from the sell. Which growth is still pretty solid, tourist arrivals is low but still positive and unemployment is low. Why has retail sales in Singapore still been so lethargic? And when do you think it will turn positive?

--------------------------------------------------------------------------------

Tee Hieong Tan, CapitaLand Mall Trust - CEO & Executive Non-Independent Director of Capitaland Mall Trust Management Limited [82]

--------------------------------------------------------------------------------

I think I mentioned a couple of factors earlier in the presentation. The general outline, I think, is soft. Some impact on a very specific trade category that are linked to the property market cycle. A strong Sing dollar certainly doesn't help. I'm sure all of you shop overseas. So I think a multiple factor is tourism. Of course, we will react. They do come to Singapore. Last year, it grew at 60%, but actually, we see it only went up by 10%. So there's also something that I think the government agencies are also looking at how to recreate Singapore as, again, a place where tourists will come visit more and spend more. So downtime is important. New attraction is important. Retail offering obviously, we would have to rethink the whole discussion point about revamping. I mean all these are ongoing. The Mondavi Reserve is another pull -- major pull for tourism. All these are ongoing works. So in fact, you are (inaudible), so they're looking at creating also new attraction at the Jurong Lake District. So those are initiative at the government agency level to try to tackle the issue about tourism receipt not growing as robustly as the arrival. So I think many factors are affecting the numbers. At the end, I think economics is the key. Population, as you know, is not exactly growing.

So I would say, these are the 2 key driver, economics and demography. And of course, Sing dollar, I think those are factors as well. So multiple factors. So as you notice, I did not talk about e-commerce. E-commerce has been spoken widely. I think it is just too quite one-sided. And I think many of you analysts were over the years were probably been more circumspect in your view. There are e-commerce threat obviously, but it is not blown out of proportion as what you've seen in the West. So e-commerce is important. It's a question how you revamp, reinvent. And the retailer themselves are also adjusting to the way of looking at engagement -- the consumer. So it's not static. They are not static, and essentially they are also trying to counter the threat from e-commerce. So on balance, I will say there are net positive and net negative arising from the technology disruption in our space. Yes. But the big thing is really economics and demography, that's really the big driver, the numbers. Yes.

Any more questions? Shall we wrap up here? Okay? Okay. Thanks. Thank you very much.